Good morning and thank you for holding. My name is Paul, and I will be your conference operator today. Welcome to Alight’s Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all parties are in a listen-only mode. As a reminder, today’s call is being recorded and a replay of the call will be available on the Investor Relations section of the company’s website. And now I would like to turn the call over to Jeremy Heaton, Executive Vice President, Finance at Alight to introduce today’s speakers.

Good afternoon. Thank you for joining us. Earlier today, the company issued a press release with fourth quarter and full year 2022 results. A copy of the release can be found on the Investor Relations section of the company’s website at investor.alight.com. Before we get started, please note that some of the company’s discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in the company’s filings with the SEC, including the company’s most recent Form 10-K as such factors may be updated from time-to-time in the company’s subsequent filings with the SEC. The company does not undertake any obligation to update forward-looking statements. Also, throughout this conference call, the company will be presenting non-GAAP financial measures. Reconciliations of the company’s historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today’s earnings press release. On the call from management today are Stephan Scholl, CEO; and Katie Rooney, CFO. After their prepared remarks, we will open up the call for questions. I will now hand the call over to Stephan.

Thank you, and good afternoon, everyone. We are excited to share our Q4 results where we finished the year with great momentum, delivering another quarter ahead of expectations, with revenue up 9% and adjusted EBITDA up 27%. Our strong finish to 2022 completes year two of the three-year plan we outlined in 2021 ahead of expectations. Our consistent performance is a testament to the differentiated value we deliver for our clients and their employees and the attractive market opportunity that Alight is uniquely positioned to meet. Our BPaaS offerings have accelerated our strategy by connecting the power of data with our products and capabilities across the spectrum of human capital solutions to redefine the future of employee well-being. This strategy has culminated with transformational wins for Alight with PwC, Shell and the Federal Thrift and this quarter is no different. We signed a company defining long-term agreements with GE and another Fortune 10 company where our Alight Worklife platform serves as the front door to connecting high value content and driving employee engagement. With these new wins, we are accelerating our investments, while delivering double-digit growth in 2023. Since going public, we have met or exceeded expectations each quarter. More specifically, in 2022, full year total revenue increased 7% to $3.1 billion, driven by 9% growth in recurring revenue, which now represents approximately 84% of total revenue. On a total contract basis, the bookings of our technology-led BPaaS solutions grew nearly 45% to $871 million, well ahead of our $680 million to $700 million annual target. And BPaaS revenue for 2022 was $564 million, up 45% versus prior year and now comprises 18% of total revenue, up from 13% in 2021. Adjusted EBITDA increased 6% to $659 million, even with $38 million of incremental investments in the year. And finally, we achieved operating cash flow conversion of 43%, up from 19% in 2021. I am incredibly proud of the way our team continues to deliver on our commitments, while making meaningful progress on our transformation. We have focused on three key areas: products and technology; our commercial go-to-market; and how we deliver for clients. First, in product and technology, we launched Alight Worklife and migrated all of our clients onto our enterprise-wide employee experience platform. This is the foundation for engagement. Worklife has become the single resource from daily well-being to complex care and the Alight Worklife mobile app is key to digital engagement. In 2022, the app was downloaded 1.2 million times. Our monthly active users increased 170% and through annual enrollment, we saw a 200% increase in digital benefit enrollments with higher overall client satisfaction. Next, our commercial go-to-market. We have built out our new logo team, as well as value engineering and solution architects to accelerate our growth. Since 2021, we have won over 700 new logos, including Navistar, PwC, Sartorius, Shell, Genuine Parts, Siemens Energy and AutoZone in addition to our great Q4 wins. We are just shy of our three-year BPaaS bookings total contract value target by the end of year two. Finally, we are delivering for our clients. As I said before, we believe that Alight is in a category of one when it comes to bringing our platform and content approach combined with decades of services expertise. In 2022, we onboarded the Federal Thrift, the largest transaction of its kind with over 6 million participants. And through annual enrollment this past quarter, our digital CSAT or customer satisfaction was up 10 points, while reducing overall live call volumes, a significant factor in how we staff and manage, while delivering for our clients moving forward. The momentum we have heading into 2023 is because of these focus areas that bring together the power of One Alight and is the reason we are winning these transformations of new deals that support both the employer and the employee. For the employee, Alight Worklife simplifies and improves the experience and value they are able to derive from the complex ecosystem across employer benefits and well-being investments. For the employer, these solutions help them achieve a higher ROI, while improving employee satisfaction and engagement. A real-life example we come across often is family planning. In the traditional model of support, an employee needs to navigate multiple siloed applications to get support with medical or adoption planning, insurance coverage options and plan selection, HSA, FSA, and 401(k) decisions and lead management. This places tremendous mental stress on the employee trying to manage it all in what is supposed to be an exciting time of life. Now with our integrated Alight Worklife platform, one status changed where the employee triggers a proactive, data-driven, personalized message with support and options to address all dimensions of family planning, even surfacing new well-being programs and resources they typically wouldn’t have known existed, all in a seamless experience. Another example of a high impact life event is divorce and the connection between employees’ financial stress and anxiety driving a need for mental illness support. This employee may have multiple 401(k) loans and no remaining holiday time; typically, a company will not be able to connect all the dots on this specific employee unless they have the data on them in one connected Alight Worklife platform. Just two examples of many, but this is the value of the Alight Worklife engagement platform. As we enter 2023, year three of our transformation, I am more confident than ever that we are focused in the right areas, and as I said earlier, we will continue to accelerate our investments, strengthening our competitive advantage and further developing our differentiated solutions, which are winning in the market. With our strong bookings growth and highly recurring revenue model, we ended the year with over $2.9 billion of revenue under contract for 2023, the highest starting point for Alight ever. For context, $2.9 billion was our entire revenue in 2021. This gives us confidence that we can continue to improve growth, margin and operating cash flow in 2023, while accelerating our technology roadmap, despite what we and others believe will be a tougher macroeconomic backdrop. For 2023, we will complete our three-year plan ahead of the original outlook. We expect total revenue growth of 11% to 12%, adjusted EBITDA growth of 12% to 14% and operating cash flow conversion of 45% to 55%. Importantly, when you look at the quality of the mix of our business, in 2023 following the strong execution of our transformation in prior years, we expect a higher value BPaaS revenue dollars to grow over 25% for the year. Now let’s dive more into 2023, so I can share some key areas of focus. We believe that in a recessionary environment, employers are under increased pressure to hold the line on spending; proving out the ROI on benefit spend is even more critical. Additionally, we believe that companies with truly differentiated well-being programs will be those that retain top talent during challenging times and ultimately position themselves well for long-term success. To continue to execute on our strategy, we are accelerating our investments across three priorities. First is the Alight Worklife platform. Our 2023 product roadmap kicks off with the first release date this month, where we will expand access to Alight Worklife to all family members, which we believe will make it the first corporate platform of its kind. The expanded access will allow us to move the needle in an even more meaningful way on caring for the well-being of the entire family unit. Additionally, we are seeing higher engagement through our Alight Worklife AI engine; recent entrants have validated the importance of AI being at the center of our platform strategy. Last year, our engagement channels, such as our intelligent virtual assistant, were up 20% and we are seeing significantly higher conversion rates on campaigns leveraging AI for clients. Finally, we are accelerating the move to the cloud and our back office infrastructure. This will enable us to better manage seasonal peaks and demand while improving the employee experience for our customers. Second, we are strengthening our operating model to showcase the power of One Alight by shifting our content-aligned care and services model to be more standardized and automated. We can leverage our global capabilities and improve the customer experience while reducing the cost to serve for all our clients. Third, we are evolving our BPaaS solutions across well-being, driving more differentiation and increasing our revenue potential as we address a bigger need for our clients. Today, we have over $1 billion of upside in our installed base alone as we work towards having 90% of our sales team certified on One Alight and launched the next phase of our well-being and engagement solutions we will capitalize on our growing total addressable market.

Thank you, Stephan, and good afternoon, everyone. We continue to drive positive results across our business as we close out the second year of our transformation. I am pleased to share our fourth quarter results, capping a year in which we beat the high end of our guidance range for revenue and achieved the high end of our guidance range for adjusted EBITDA. Let me start first with our commercial results. We continue to exceed our expectations and see strong adoption of our BPaaS offerings, highlighted by company defining new logo wins with GE, Chipotle and a Fortune 10 client during the fourth quarter. On a total contract basis, BPaaS bookings for the full year grew nearly 45% to $871 million, well ahead of our $680 million to $700 million target. This bookings growth translates into higher contracted revenue and accelerating overall revenue growth. Our BPaaS revenue for 2022 grew nearly 45% to $564 million and comprised 18% of total revenue at year-end, up from 13% at the end of 2021. With our strong execution, we ended the year with over $2.9 billion of 2023 revenue under contract, our highest ever and over $800 million higher than our starting point in 2021. Across our consolidated results, we continue to see progress as our investments pay off and the increasing quality of the mix of our business shows. Full year total revenue increased 7.4% to $3.13 billion, driven by 8.6% growth in recurring revenue, which now represents approximately 84% of total revenue. Adjusted EBITDA increased 6.1% to $659 million with an adjusted EBITDA margin of 21%, in line with prior year, despite $38 million of incremental investments in the year. While we continue to accelerate our investments in Alight Worklife and large new deals, we delivered operating cash flow of $286 million for the year, with a free cash flow conversion of 43%, significantly ahead of last year. Next, I am going to discuss the performance of our two primary segments. First, for Employer Solutions. Fourth quarter revenue was up 10% with recurring revenue up 9.3%. Project revenue was up 17.4% in the quarter, driven by several larger annual enrollment projects that we discussed investing in during our November call. Fourth quarter gross margin increased 190 basis points, benefiting from seasonality and the positive return from some of the investments earlier in the year. Fourth quarter adjusted EBITDA increased 24.4% to $240 million and adjusted EBITDA margin expanded 330 basis points to 28.7%. Turning to our Professional Services segment. Fourth quarter revenue was up 2.2% to $95 million, driven by 3% growth in recurring revenue. Importantly, we continue to see strength in our sales pipeline and backlog heading into 2023. Gross margin was up 380 basis points in the fourth quarter to 25.3% as several larger deals went live. Fourth quarter adjusted EBITDA was $1 million. In addition to our focus areas driving transformation through technology and commercial, we know that connecting high value content to our platform has the power to change the way that people interact with HR, their benefits, and their employer on some of the most important life decisions. To that end, in December, we closed on the ReedGroup transaction for a net consideration of $87 million. This is an important bolt-on acquisition and lead management solution that brings critical content to build upon Alight's strategy to support employees and their dependents from hire through retire. Turning to our balance sheet. Our year-end cash and cash equivalents balance was $250 million and our total debt was $2.8 billion. Given the interest rate environment, we believe we are well positioned, given our hedging strategy with over 70% of our debt portfolio fixed through 2024 and 50% fixed for 2025. In addition, we have no near-term debt maturities of significant size until 2025. We did not make any share repurchases in the fourth quarter, but we will continue to opportunistically evaluate stock buybacks against other attractive opportunities we have for investing in the business organically and inorganically through disciplined M&A. Now let me provide you some color on our cash flow performance and our outlook going forward. In 2022, we invested an incremental $38 million in technology, commercial and to support significant new logo wins, including the Federal Thrift. We made progress on improving our cash flow from operations by generating operating leverage on the investments we made and improving working capital metrics. For the 12 months ended in December, we generated $286 million in operating cash flow versus $115 million over the same period last year. Turning to our outlook. As Stephan highlighted, we continue to see the momentum building after a year or two of our transformation. We believe the mission-critical products we provide and our strong client relationships position us well to withstand economic challenges. A few stats worth keeping in mind: We have approximately 84% annual recurring revenue with 98% average annual revenue retention, up from 97% in 2021. Our average contract lengths are three years to five years and we serve a diverse client base, including approximately 70% of the Fortune 100. With that, I’d like to turn to our 2023 outlook for the year, which is in line with our stated goals of improving revenue growth, margin expansion, and higher operating cash flow conversion. Our outlook is revenue of $3.47 billion to $3.51 billion or growth of 11% to 12%. Adjusted EBITDA of $735 million to $750 million or growth of 12% to 14%, with EBITDA margin expansion of 15 basis points to 50 basis points, even with the $50 million of investments, which I will discuss shortly. Adjusted EPS of $0.62 to $0.67 or growth of 9% to 18%. BPaaS TCV bookings of $900 million to $1 billion. And an operating cash flow conversion rate of 45% to 55%, up from 43% in 2022. Let me share the key factors driving our outlook. First, revenue growth is driven from new deals going live, including large One Alight BPaaS wins, the full year effect of the Federal Thrift contract, and the addition of ReedGroup. Second, given the commercial successes of the first two years of our transformation, we are continuing our investments in Worklife and our go-to-market strategy, as well as implementing the large new clients we mentioned earlier. We expect the spend tied to these initiatives to be approximately $50 million. Next, as we enter the next phase of our transformation to drive margin expansion and higher cash flow, we are announcing a two-year restructuring program in order to accelerate our back office infrastructure into the cloud and transform our operating model with how we deliver for clients every day, leveraging technology and ultimately reducing our cost to serve. Total costs are estimated at $140 million for the program, weighted more towards year one with estimated savings over $100 million annually, making for a very strong payback over time. Even with this spend, we will increase our cash flow conversion each year and drive Employer Solutions gross margin expansion of 50 basis points to 100 basis points in 2023 and 100 basis points to 150 basis points in 2024. Finally, we are cautiously optimistic on impacts from the macro environment in 2023 and its potential impact on our commercial pipeline and project revenue. We expect the seasonality profile in 2023 will be largely consistent with 2022. As mentioned previously, we are hosting our Investor Day at the New York Stock Exchange on the afternoon of May 15th and look forward to sharing key updates and further details on the next phase of our ongoing transformation. In closing, we are ahead of our initial plans with great momentum and are continuing to invest in our growth as we look to 2023 and beyond. We are confident that our transformation journey and dual-pronged engagement platform and content strategy will continue to succeed and position us as the leader in our industry.

Thanks for taking the questions. I wanted to dive a little bit into the restructuring program that you guys announced. It seems like you have a good amount of savings and quite a bit of wood to chop. But how should we be thinking about the cadence of these cost savings and how much is in kind of that 2023 outlook, how much falls into 2024?

Yeah. Kyle, thanks for the question. And you will see, too, we did put out in the 8-K. You will see some ranges on costs, which I think will be helpful for you as well. But we said about two-thirds of the cost will hit in 2023. Intentionally as we accelerate the technology transformation, particularly to serve some of these big new client wins. From a margin perspective, as you think about the savings around that, that’s factored into our guidance for 2023, and then, I think, importantly, that’s why I mentioned some of the stats in 2024. You will start to see improving operating cash flow and a faster acceleration on margin improvement in 2024.

Okay. That’s really helpful. And I guess just a quick follow-up on the Professional Services outlook. It seems like that’s coming in a bit stronger than expected. I know you guys kind of mentioned the better pipeline heading into 2023. Have you guys seen any pressure or impact from kind of some of the macro uncertainty or has it kind of been guns blazing and full speed head on the services front?

It’s guns blazing.

Yeah. A little bit of both. What I’d say, you are right, the team has done a great job in that business, really driving the strongest backlog we have had heading into 2023 and I think some of that ties into some of the One Alight deals we are winning where we can play a larger role from a Professional Services perspective as well. What I would take how we have talked about it on some of the earlier calls as well. The one area where we have seen some slowdown is more on the international front as we see a little bit of slowdown there, but so far, we have been able to navigate through that. And again, as I look at the pipeline heading into 2023, it’s still very strong.

Great. Thanks so much. Not only a nice quarter, but really, really nice outlook. So congrats on that.

Thank you.

Thanks, Kevin.

Really well done. I don’t know either Stephan or Katie, but can you break down the revenue? Clearly, you are seeing a significant increase in revenue of about 11% to 12%, which is up from the original 6% to 7% when you set the 2022 expectations. Can you explain some of the reasons for this change, Katie? Maybe pricing has played a role, and the bookings certainly stood out as well. Is there any macroeconomic impact to consider? This is a fantastic outcome, especially since there is often client hesitancy to switch amidst macro uncertainty. I’d like to understand that a bit better. Also, could you provide insight on what percentage BPaaS should represent of revenue in 2023?

Sure, let me start and then Katie can provide additional details. The key point I've mentioned earlier is that we have a $2.9 billion backlog, which is equivalent to our total revenue in 2021. This reflects the trend toward quality that I’ve been discussing for the past few years, emphasizing the growth of our annual recurring revenue (ARR), subscription-based model, longer contracts, and higher-value deals. The benefit of securing these ARR deals is significant, as they allow us to become less dependent on one-time project-based business moving forward. However, in 2023, we still heavily rely on project work, and as Katie mentioned earlier, our backlog remains strong in the one-time project sector, which is experiencing a resurgence. Nonetheless, the main focus over the past couple of years has been on developing a robust recurring revenue stream, with BPaaS playing a crucial role. Last year, we saw over 40% growth in BPaaS, and this year we anticipate 25% growth, with projections of 13% to over 20% growth in 2023. This is a significant factor in our overall performance.

As a percent of revenue.

As a percent of revenue.

Yeah. Yeah.

As a percent of revenue. So those are the big contributors to the consistent growth that we are seeing right now. What would you add, Katie?

I think that's a great point, Kevin. People have been eager to see if we can truly accelerate growth in this business, and I believe we are achieving that effectively. As Stephan mentioned, we are focusing on recurring subscription-based revenue that is stable and builds strong relationships with our clients, which in turn enhances our financial profile. Achieving 20% of our revenue from BPaaS in 2023 is a significant milestone for us.

That's significant, especially from a higher starting point. Stephan, you mentioned the possibility of generating over $1 billion in revenue from our existing installed base. Do you have any insights on how that might materialize? Is it primarily driven by the success of the app, perhaps through additional modules or upselling packages? It's a substantial figure, particularly when compared to our current revenue run rate.

If you consider the platform approach of Worklife, it serves as a main entry point. Recently, I announced significant wins with GE and a major Fortune 10 company that will reveal their identity publicly soon. These are major deals that integrate extensive content and third-party resources into our Worklife platform, which results in a much broader economic impact. The scale of content we are managing from the HR and benefits perspective is substantial, and we succeeded in convincing GE to share all that content due to the Worklife platform approach. Over the past year, and especially in 2023, I've noticed that nearly every client I've spoken to on the HR side is focused on consolidating and simplifying their operations to reduce costs. They are overwhelmed by having numerous point solutions and are looking for a single platform to unify their data. As a result, they are approaching us to be the aggregator and integrator, leveraging our robust service delivery capabilities. We've secured valuable deals with our partner, Workday, to help streamline legacy systems like PeopleSoft. We have the expertise to connect disparate applications and data into one cohesive platform. I highlighted this in our presentation with the family planning example, showcasing how clients can access an Alight Worklife that combines various vendor systems in one location. This compelling narrative is particularly resonant for our clients during these challenging economic times.

Makes a lot of sense. Congratulations, again.

Thank you.

Yeah.

Thank you. Our next question is from Scott Schoenhaus with KeyBanc. Please proceed with your question.

Hi, team. Congrats on the strong quarter and ongoing execution. So I wanted to dig in on the 2023 revenue guidance. Your guidance range calls for 11% to 12% growth and just wanted to see if you could provide color on the breakout between Employer Solutions growth and Professional Services since you did note the project revenue rebounding with higher starting backlog on the Professional Services side?

Yeah. Thanks for the question, Scott. So you are right, we didn’t give formal guidance kind of broken down at those levels. But what I’d say is, both Employer Solutions and Professional Services are going to see accelerating growth into 2023. So we are expecting a nice rebound in Professional Services both top and bottom line, as we see that backlog now really start to materialize into revenue.

Okay. That’s helpful. Thanks, Katie. And then on the margin side, obviously, you have explained some of the investments, whether it be the back office or the investments in Worklife on the ongoing ramp-up of new contracts. But in this environment, are you also able to take up some pricing on contract renewals as you demonstrate ROI, I know that’s been always a pushback. And I just want to kind of talk about the current environment and how you are thinking about renewals with contracts? Thanks.

Yeah. Thanks, Scott. Listen, it’s a really important question and we are going to spend more time on it at our upcoming Analyst Day. We added a slide Stephan mentioned in the deck we posted to our earnings website today. There’s a slide in there, slide 11 that starts to show. We need to think about price differently, right? Price in the context of value for our customers is how we will obviously be able to drive that. So, yeah, there’s incremental solutions and then there’s incremental support in terms of how we help our clients and drive those outcomes. So I think that page is kind of a good explanation of how do you actually think about the underlying value at all levels of the ecosystem, starting with the platform all the way down to the services we can provide. So that when you do get to a renewal, it’s less about just price on existing; how do you actually solve a bigger need for that client where you are adding a new solution and you are able to drive more value for us and for them.

I mean, we are aggressively moving above the transaction pricing model and getting more, as Katie just said, into the outcomes-based pricing and you need a platform to do that. You need analytics; you need to help drive better decisions and better outcomes, and that’s, again, back to that starting a family or the divorce example I gave. Those are two really basic and simple that everybody can understand how complicated those worlds are. And when you see how we used to do it to now how we do it through Worklife, it is a very different scenario that’s much more complete and that’s worth a different economic profile in terms of helping clients take costs out and getting a different economic value for the platform versus just transaction pricing.

Thanks so much for all that color.

Helpful, Scott.

Congrats, again.

Yeah.

Thanks, Scott.

Hi, good afternoon. I wanted to ask about the revenue outlook as well. I heard you, Katie, discussing the accelerating revenue growth for both segments. Is there a specific timing we should be aware of concerning clients converting to revenue? I'm curious if this is in the first half or the second half. Also, did you mention the acquired revenue? I'm trying to understand how much of this is dependent on new deals versus being organic. Thanks.

Yeah. Thanks, Tien-Tsin. So maybe a couple of things. In terms of the phasing of revenue, similar to last year, it will ramp, but not to the extent we saw last year, right? Because remember, we didn’t have, for instance, some of our larger contracts went live in the back half of last year. Now you have a more kind of even profile. So you won’t see a ton of volatility. You do see like Professional Services that will, again, still have that ramp into the fourth quarter just as you see more of those deals going live. In terms of the acquisition, what I’d say is, it didn’t have a material impact on our 2022 results. I mean we would have exceeded our expectations even without the acquisition. So we are accelerating topline margin and cash flow even without the acquisition, which I think is an important component to the story here.

Got you. And then just my follow-up is to your transformation program. Any risk here in terms of client delivery as you go through the transformation shift to the cloud, standardization, that kind of thing? It makes sense in terms of how you described it, but just the risk profile of initiating the change and it sounds like there’s going to be some cash savings as well. So did you quantify the cash go capital savings from the deal from the program?

I will address the risk aspect. Last year, I mentioned that there are always pivotal moments and one of them was the adoption of Worklife by all our clients. We successfully standardized our approach rather than relying on customized solutions, which we accomplished in May. This has significantly reduced our risk because we are no longer dependent on individual client preferences for implementing customized solutions. Additionally, as I pointed out during our last meeting, few companies can manage a large-scale program for Thrift, the Federal Government, and we have successfully done that on time. This program is now very successful. With our standardized platform as a foundation for implementing extensive solutions, coupled with our delivery capabilities and program management expertise, I feel optimistic. These new contracts are expected to drive substantial growth for us in the coming years, although they will not significantly impact our revenue in 2023 as we are making considerable investments this year. Nonetheless, we are confident about these new large projects.

Yeah. I think that’s well said. I think we have navigated the risk well. In terms of cash savings, Tien-Tsin, we did say it will result in $100 million of savings. I mean that is cash. I think also another component of that is CapEx, right, being able to accelerate this year into next year that will also then result in kind of lower CapEx as a percentage of revenue after that as well.

Got it. If you don’t mind me asking a third one. Just on the $50 million…

Yeah. Of course.

Yeah. Thank you. The $50 million in investments versus the $38 million that we saw in 2022, how much of that is incremental Worklife investments versus the new deal implementation? And I am assuming once you get through this transformation program, we should see less incremental investments as it relates to new deal limitation, is that sort of the byproduct of the program. Just to clarify. Thank you. Go ahead.

Yeah. I think that’s a good way to look at it. I almost don’t separate the two between Worklife and those specific clients because in essence we are accelerating a lot of the technology to support those clients and others, right? It’s almost kind of innovating with them. So and remember, on some of those larger clients, we do defer some of those costs. So some of that is deferred, but then you have the upfront technology spend that we are obviously building out the some of the platform and analytics capability to serve them. I think of that more broadly across our client base. We just need to accelerate it, obviously, to bring these key deals on.

And I think that, that last sentence, Katie just said, Tien-Tsin, which is if it wasn’t for these two deals, we could have streamlined and taken more time over the next two years and that’s why we want to call it the $50 million. These two massive deals really help accelerate our platform playbook and we need the functionality and the features to go live with those two key clients. And so it’s all a good thing, but it accelerates it into a much shorter timeframe than we had originally planned.

And I’m sorry, I am just going to say one last piece on that, Tien-Tsin, which I think is important. That’s why we have been really thoughtful though and we are still doing this while being able to improve margin and operating cash flow. I mean, I think that’s the context to make sure we are doing this in a disciplined way.

As well as, I would think, benefit the installed base with the improvements as well. I can understand.

Right.

Right.

Hi, this is Emily Marzo on for Heather Balsky. Thank you for taking my question. Congrats first on the quarter. Second, you have previously laid out a long-term 30% EBITDA target. With this incremental spend — yeah, with this incremental spend and these new BPaaS client wins, how should we be thinking about that and is that still the long-term target?

Absolutely. It’s absolutely the long-term target. I think that’s why we have tried to be more intentional about showing the path forward and why we are making some of these investments, why we are doing the restructuring program. So and when I mentioned to you, there’s a good slide in the deck at slide 19 that starts to show, right? What do over the next couple of years? How can you measure us, right, against that margin improvement and we are going to continue to talk about that, I know there have been a number of questions on that front. But the whole intent of the investments we are making is obviously to drive better outcome financially, but more importantly, to better serve our clients, right, to have a more roadmap, we can move faster on from a technology standpoint to serve them better, to simplify the experience and make it a better process for their employees. So that’s absolutely still the intent.

Okay. Great. And just as a follow-up, how should we be thinking about your capital allocation strategy over the next few years? You have the repurchase plan. You have a successful acquisition and this investment program. So how should we be thinking about that?

Yeah. What I would say is our capital allocation priorities are front and center. I mean, we spent a lot of time on them and we look at them every day, right? It has to drive a return on capital that makes sense for us and our clients. And our priority has been and continues to be investment into the business organically and inorganically. And what we have said is if we don’t see the right return on those opportunities, and we can be opportunistic around buyback, that will be where we go next. So in the fourth quarter, we didn’t end up doing buyback, as I mentioned, because we found kind of the right inorganic opportunity, but we will always be evaluating those kind of against each other from a return on capital perspective.

Thank you. There are no further questions at this time. I’d like to hand the floor back over to Stephan Scholl for closing comments.

Great. Thanks everybody for joining us today. Really appreciate your time. Obviously, hopefully, you can see we are executing on our strategy, expanding relationships with new and current clients and delivering on our commitments and we look forward to seeing many of you in May at our Investor Day in New York City. Thank you and all the best.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.